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Background

Why we are doing this study:
Most companies researched in our exploratory study had begun their CRM strategy a few
years ago, well before today’s current market awareness and level of understanding of
CRM was clear. Today’s CRM market has gained momentum, and as companies are
becoming more familiar with the ways in which they can maximize the value of their
CRM initiative more efforts must be made to enhance the ability to better understand
CRM deployment in order to be able to compete. Additionally, the types of CRM
products and services have shown clear signs of improvement with which a future study
must be made to research changes in the CRM market.
(diagram)

In today's digital world, organizations are beginning to realize the benefits of having
strong customer relationships and CRM solutions are becoming recognized as important
tools for retaining customers and attracting new clients. This new technology has been
designed to enhance an organization's ability to interact, attract and build one-to-one
relationships with its customers.

As engagements in CRM and ebusiness become more complex, so too have the issues
governing the organizational acceptance of these projects. That complexity is in part the
result of the increasing overlap and integration of people and IT issues. It is also due to
clients expanding their operations abroad and transforming themselves into multinational
or global companies. Organizations are facing a growing need to transform themselves as
they confront an increasing number of market forces, particularly significant are changes
such as privatization, globalization, new technology and mergers and acquisitions. The
growing emphasis on transformational change, which affects the entire organization, has
led to engagements that are longer in duration and larger in scope.

Apart from the issues of change, one of the many challenges that organizations face today
is the fact that they have more initiatives than they have capital or resources with which
to implement them. Many of these initiatives are disparate across the organization with
no single or universal view. While there is much confusion surrounding the best practice
methodologies for measuring CRM initiatives, some of the more common themes to
consider include better customer service, customer retention, number of referrals and
customer acquisition and how these have a direct impact on the bottom line and increase
shareholder value.

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many organizations seem to embark upon large CRM projects without careful consideration about what it should be measuring. or respond to competitive threats more quickly and cost- effectively. This implies the greater need to continue investigating the correlation between ROI. However. There are several reasons why it is a challenge to calculate ROI in CRM investments: • Relationships are an intangible entity.Y. Many companies including X. However recognizing the key attributes that help retain customers and focusing on proactive and segmented client management is of critical importance. faster time to market.Z have found it difficult to provide specific monetary values in terms of new customers identified.Theoretical Background CRITICAL SUCCCESS FACTORS FOR SUCCESSFUL CRM DEPLOYMENT: 1) Managing Performance Benefits For many companies in our exploratory research. Calculating an exact monetary value for relationships or customer retention is not an easy task. increased sales. identifying the right types of metrics to track and measure whether a CRM project had reached the desired goal. are quantifiable values and provide returns to the business. They can document situations where specific customer information has helped to align business processes. relationship management and the business outcome of these CRM investments. through which the level of customer knowledge can be used to gain new business revenue or provide cost savings to avoid business risks. return-on-investment (ROI) calculations can become viable when users have a good knowledge of their customer base. However. Calculating an exact monetary value on relationships or customer retention is not an easy task. whether financially or through better service to its customers. or faster response to business conditions. It is not always easy to determine the link between a relationship and ROI. seemed to be a task that was not easily definable. • Communication across the enterprise on specific CRM goals has not been shared and users often do not have any idea of the cost/investment in customer information . discover new business opportunities. when considering investment in relationship management it is a challenge by any standard to measure whether the investment is paying off. While it seems only logical that a company should be able to quantify its investment in projects based on solid financial gains or other tangible returns. The main issue is to ensure that appropriate tracking and measuring techniques are in place so that the impact of any change to the business process can be assessed and translated into measurable gains. Efficient business processes.

2) Managing Organizational Discipline In today's digital world it is becoming increasingly critical for organizations to be able to learn to adapt quickly to the changes taking place in the new economy. Service providers with skill sets in helping companies deploy CRM or ebusiness initiatives need to have the ability to educate and consult in the area of business changes and ensure that a level of trust and discipline is gained across the entire organization. this goes beyond involvement solely in the shaping of the system. then apply these activities to shape the organization. an organization requires a high degree of understanding. change management. Often the problem with these projects is not on the technology front. This entails a fundamental change in the culture. in which the CRM initiative was launched at the marketing level and learning to deal with the mentality of IT people was considered a difficult task. organizational redesign. communication and commitment from the entire organization. many service providers claim to offer consulting services that encompass the broader scope of business strategy. Today. acquire and share knowledge and manage business processes.such as increased communication or greater service to customers are difficult to measure in financial terms. but more in the "soft" skills of dealing with people and processes. The major issue for many of the client companies related to employee acceptance and discipline and initial resistance to using the new system.in relation to outcome of their work. These organizations are able to pursue goals in a changing environment. Gaining business value from the technology seemed to be a challenge to address at the IT level. The key in avoiding the great divide is to ensure that employees who would use the system are involved at the design phase of the project. A case study of an anonymous German bank is a good example. In developing CRM solutions the service provider plays a major role in delivering change management skills during the course of the project. and encompasses an understanding of the business implications and how to maximize the value of the information that is being collected. based on the ability to create. human performance and cultural change required when deploying CRM or ebusiness strategies. However. Because of these challenges the roles of service providers in projects need to go beyond operational issues and include assisting clients to deploy effective performance indicators that determine the value-proposition of the CRM initiative. in order to be able to achieve this level of discipline. mindset and operations of an organization. However. • Developing tools that allow for easier tracking and management of ROI results are often not outlined at the start of a project and users who are not accustomed to this activity lose sight of the real objective. . • "Soft" benefits -. Organizations that are able to mobilize all their resources and the knowledge that exists within the organization are in a better position to enhance their performance.

are limited. mainly the large consulting firms that have established themselves as credible strategic consultants and that continue to expand in this area. It can be acknowledged that other pure play CRM and ebusiness providers have some capabilities in consulting. using the information as a proactive tool to sharpen and build on customer relations and making forward looking analysis available throughout the organization. that is. in reality. Automating the front office is only one step towards building a true customer-centric organization. one of the concerns of ‘smart’ CRM is finding professional people in the marketplace who have the right skills to address business problems. using the information as a proactive tool to build on customer relations and make forward-looking analysis available throughout the . but most of these offerings. develop predictive modeling skills and analyze customer information in real time. i. to data mining tools. 3) The Appropriate Customer Care Solution To date. which is important to clients. Developing partnerships with providers with different skill sets and core competencies is important in moving forward in the creation of new business paradigms. IDC believes that service providers will need to develop training or offer analytical services or partner with niche players that have specialized in this area. • Invest in customer data integration expertise. many CRM initiatives have focused largely on the operational aspects of CRM.However. Automating the front office is only one step towards building a true customer-centric organization. The real challenge lies in the way CRM is used by organizations. The one important aspect of CRM that until now has often been overlooked is the analytical side.e. in reality a level of depth and knowledge can only be attributed to a select few. • Continue investing in CRM training services or partnering. sales and marketing solutions with elements of online functionality. The one important aspect of CRM that until now has been overlooked is the analytical side. However. such as deploying a call center or sales force automation as documented by [article/paper on ways of CRM]. The real challenge lies in the way CRM is used by organizations. The customer care solutions that have been implemented by the companies in this study range from contact centers. • Focus on core competencies and partnering strategies: It is this "core" that permits you to maintain a competitive edge and maintain differentiating brands. • Emphasize organizational effectiveness to enable change. IDC's Recommendations for Service Providers: IDC offers the following recommendations for eCRM service providers within the context of this dynamically changing market: • Focus on profitability and value creation of ROI: One approach is to divide the project into phases in order to evaluate the impact in several increments and demonstrate that the work is producing quick results.

sales force automation and marketing automation) and identifies intelligent CRM as the focal point of the operational activities. (CRM at the heart diagram) Contact Marketing Centres Automation Sales Force Force Automation Smart CRM CRM Solutions Today. CSC recognized the gap created by the shortage of skilled people and . However. predict and turn customer information into a strategic resource have the potential to secure themselves as early leaders in managing customer data in real time. Companies that neglect this next phase of intelligent CRM could find themselves becoming footnotes in the competitive landscape. Figure 4-1 illustrates the operational elements of CRM (contact centers. Partnering with such players will allow service providers to deliver to their customers a CRM solution that has built- in real-time data intelligence functionality. but there are no market leaders in this space as yet.organization. develop predictive modeling skills and analyze customer information in real time. such as deploying a call center or sales force automation. one of the concerns of intelligent CRM is to find professional people in the marketplace with the right skills to address business problems. In the case study of the German bank. Many of the case study examples have been focused on the operational aspects of CRM. the market has woken up to intelligent CRM. and some have addressed the analytical part of CRM. either running in parallel or as disjointed additions to the project at a later stage. profile. Software providers that are able to enrich and facilitate a company's ability to consistently identify.

mine and familiarize themselves with the data pool. IDC believes that service providers will need to develop training or offer analytical services in this region or partner with niche players specialized in the area. According to Robeco the key is to keep the ongoing development as close to the users as possible and keep them continuously involved. . As the realization that the market in Europe has a shortage of these skill sets increases. This way the company can avoid any misunderstandings. On the one hand both companies wanted to lead in the adoption of new business models in their respective industries. Both companies had taken on the CRM vision when CRM was in its infancy. 4) Critical Milestones The major concern for nearly all the client companies was the issue of user acceptance and the changes that have been brought about by the CRM initiative. Robeco was unable to find a CRM solution that could address its private banking industry issues and therefore had to customize an out-of-the-box solution. The knowledge and skill transfer from the service provider was critical in allowing the companies to be able to manage change- initiatives in the future. but on the other hand they faced the risk of failing. Being early adopters of CRM in the context of market maturity and knowledge of product availability was another issue that both Robeco and Murphy's pointed out. as they were prototype samples. The customer care staff and the sales force work well together and have very strong and established relationships which have proven to be a major advantage and went a long way towards the management of the change through sales teams. Murphy's realized that there was a degree of risk involved in being the first customer to implement this sort of initiative as they felt they had to train the consultants and were basically a test case for the providers. Murphy's Brewery allowed the customer care people to be the first line of support for the sales force when the project went live.placed two of its own consultants to help manage.

The main issue is to ensure that appropriate tracking and measuring techniques are in place so that the impact of any change to the business process can be assessed and translated into measurable gains. By identifying the need for change it addressed key aspects of the organization. and although the financial results looked positive. The bank recognized the key attributes that would help it retain its customers.ANALYSIS Robeco Private Banking is a good example of an organization that was an early adopter of CRM. increasing revenue and profit per client. . IDC believes that this is the average payback period for a large-scale CRM initiative. it aimed to provide a much more comprehensive service. systems and staffing. it has realized that payback will not be apparent for another two to three years. This initiative has since allowed the company to gain a deeper understanding of its client base. processes. focusing on proactive and segmented client management.